Special Report: Light Rail

More Mixed Messaging on LRT Funding

This week, we heard contradictory messages from Provincial officials on whether Hamilton will have to contribute some capital funding toward the B-Line LRT.

By Ryan McGreal
Published March 06, 2013

Will Hamilton be expected to contribute some of the capital cost of a planned east-west LRT line? Will the amount we contribute help determine Hamilton's place in the Metrolinx priority list? It seems to be impossible to get a straight answer to these questions.

Just this week, Hamilton heard two contradictory messages from Provincial officials.

On Monday, Spectator columnist Andrew Dreschel quoted Leslie Woo, vice-president of policy, planning and innovation for Metrolinx:

"If a municipality has an ability to present a financial contribution to the projects, that gets bonus points," Woo said in an interview.

Acccording to Dreschel's column, Metrolinx will use a city's direct capital contribution as one of its criteria in determining the order in which projects in its phase 2 priority list get completed.

On the same day, an article [behind a paywall] in YourHamiltonBiz.com quotes Transport minister Glen Murray saying the opposite:

"I am not looking, and nor do I think Metrolinx will be looking, to be influenced by direct municipal contributions to rate the priority of projects," Murray said in an interview.

"As much as we, of course, always love to have our municipal government partners as co-investors in these strategies, it is not part of how we rate the projects."

According to the article, Murray said the priority is to "maximize the growth in your tax base and the attraction of new investment and new jobs and private sector investment".

He added, "Hamilton is really leading the way on that" and praised Hamilton's "really good strategy about value planning and using infrastructure to help build your tax base to build infrastructure."

History of Mixed Messaging

This mixed messaging on LRT funding is not new.

As recently as the October 13, 2011 general issues committee meeting, Metrolinx vice-president John Howe told Hamilton City Councillors, "100 percent capital funding is the current Metrolinx funding assumption. And I think it was depicted clearly in the York Region example. That's our current funding assumption model for the Hamilton LRT project."

But last August, Mayor Bob Bratina announced that then-Transport Minister Bob Chiarelli told him Hamilton would have to cover some of the capital costs. However, neither Chiarelli nor anyone at Metrolinx would confirm how much this share might be.

Bratina raised the issue again last Monday when Councillors were considering the Rapid Ready staff report, but staff confirmed that their understanding from Metrolinx is full capital funding.

In a CBC article on the same day, Metrolinx spokesperson Malon Edwards also confirmed that Metrolinx intends to provide full public funding.

However, Edwards has repeatedly told RTH that "no final decisions have been made on technology," holding open the possibility that Metrolinx might try to fund a cheaper-to-build bus rapid transit (BRT) system rather than LRT.

However, the research on transit investments - including the Metrolinx benefits case analysis on Hamilton's rapid transit plan - overwhelmingly demonstrates that the net economic development benefit from LRT is far bigger than for BRT.

Given Minister Murray's claim that Metrolinx will prioritize projects based on economic uplift potential, that augurs well for LRT.

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan writes a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. He also maintains a personal website and has been known to post passing thoughts on Twitter @RyanMcGreal. Recently, he took the plunge and finally joined Facebook.

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By Mal (anonymous) | Posted March 06, 2013 at 13:49:50

It's clear that we're still on track to have some form of rapid transit sometime in the next 30-45 years, even if we have to cover some of the capital costs.

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By Province of Ontario (anonymous) | Posted March 06, 2013 at 16:43:00 in reply to Comment 87069

We absolutely 100% guarantee that you'll get some sort of transit that's at least slightly faster than what you have now, funded possibly 100% by us, or possibly partially by you, or maybe 100% by you and installed by the year 2025, or maybe 2050 at the latest or at least by 2100 at the absolute very latest.*

*This is not a guarantee.

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By Ryan (registered) - website | Posted March 06, 2013 at 17:01:43 in reply to Comment 87075

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By kevlahan (registered) | Posted March 06, 2013 at 15:39:18

This comment really stood out as another example of mixed messaging:

Murray said the priority is to "maximize the growth in your tax base and the attraction of new investment and new jobs and private sector investment".

This has been the basis of City staff's argument to Metrolinx to fund LRT in Hamilton. However, others (including Metrolinx spokespeople, the Mayor and the Spec) have said that the top priority is to reduce congestion, which is why Mississauga's project is still described as LRT.

If the economic stimulus argument (and by extension city-building) is the top priority, then Hamilton's LRT project should stand out as one of the most competitive! But what is the true priority list ... it is very difficult to tell.

Comment edited by kevlahan on 2013-03-06 15:40:08

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By Kiely (registered) | Posted March 06, 2013 at 17:23:57 in reply to Comment 87070

But what is the true priority list ... it is very difficult to tell.

Indeed. Perhaps for people like Ms. Woo to keep their cushy positions at Metrolinx for as long as possible? Cynical opinion I know, but looking more and more to me to be the case.

It was a questionable strategy in the first place and seemed to some to be more about the mandarins seeking total control than the as-sold notion of doing things better. I fear it has proven to be the "anchor around the neck of all projects" some critics said it would be.

Giving total control to an oversight group like Metrolinx is great if that group is hyper-competent, sadly Metrolinx is not and now all projects they touch will suffer.

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By Truss (anonymous) | Posted March 06, 2013 at 19:11:47

"and nor"? Seriously?

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By anothercapitalist (anonymous) | Posted March 07, 2013 at 15:43:38

Not going to happen people.

Congestion is much worse in other areas and to be quite frank, from a political point of view, those areas are more important than Hamilton right now.

Look for upgrades in the bus service and that's about it

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By Ryan (registered) - website | Posted March 07, 2013 at 16:34:24 in reply to Comment 87100

I'll see your pessimism and raise you the tireless hope that a group of dedicated people can change the outcome of even a preordained conclusion.

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By Noted (anonymous) | Posted March 08, 2013 at 13:04:40

"Two of the Las Vegas-based casino giants angling to build in downtown Toronto have asked the provincial Metrolinx transportation agency for help that would improve their competing pitches. The news follows revelations that the chair of Metrolinx, Rob Prichard, and another board member, Doug Turnbull, have registered as lobbyists for the consortium led by one of those companies, MGM Resorts, and are recusing themselves from any casino-Metrolinx dealings."

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By Ryan (registered) - website | Posted March 08, 2013 at 13:13:06

Spectator columnist Andrew Dreschel follows up on this story in today's column:

Transport Minister Glen Murray says Hamilton won’t have to make a direct capital contribution to build the proposed $800-million LRT system.

“They’re not going to be expected to, in the sense that we’re not asking them to make a financial contribution with a very specific tax,” Murray said in an interview.

Murray’s comment is the clearest indication yet that the province intends to live up to its 2008 commitment to provide 100 per cent capital funding for the 14-km light rail system running between McMaster University and Eastgate Square.

The full article is worth reading for the additional detail about how the Metrolinx investment strategy might work and what that will mean for the city.

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By Mal (anonymous) | Posted March 08, 2013 at 15:03:42 in reply to Comment 87139

The linked story on gridlock even gives us a bit of a sense of project priority, though there's no A/B/C as previously mentioned, just first and second phase.

http://www.thespec.com/news/business/article/899307--gridlock-in-the-hamilton-toronto-area-to-thicken-if-left-unchecked-metrolinx-president

Ferguson and McHattie are right to adopt an attitude of cautious optimism. Any time you're dealing with an election promise, it's never what it seems (eg. "We remain committed to fulfilling our promise.... as soon as Criteria X/Y/Z make it prudent to do so.").

On top of that, the province (not sure who or whether it was written down) made the LRT commitment at a time when there was a $600 million budget surplus. By 2017, a decade after that pledge was made, the bean-counters will be lucky to even balance the books.

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By Mal (anonymous) | Posted March 08, 2013 at 15:20:31 in reply to Comment 87143

"I think we have to be quite creative in the fiscal tools we’re looking at and the value in investment tools,” Murray told the Star on Wednesday. “We want look at value planning, tax increment financing, value capture.”

http://www.thestar.com/news/gta/transportation/2013/02/20/transportation_minister_glen_murray_claims_fresh_ideas_for_transit_investment.html

https://canurb.org/category/tags/value-planning
http://en.wikipedia.org/wiki/Tax_increment_financing
http://en.wikipedia.org/wiki/Value_capture

This suggests to me that the province will pay for Big Move priorities by absorbing the increase in property tax valuations/assessment growth on properties in precincts adjacent to transit corridors. The "value planning" mention suggests that those projects expected to produce greater value capture will take priority over projects where value uplift is not as significant.

Just a guess.

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By Noted (anonymous) | Posted March 10, 2013 at 16:19:02

“They recognize the fact that we are in need of some special attention.” - Chris Murray.

http://www.thespec.com/opinion/article/894048--dreschel-full-lrt-funding-a-long-shot


“We will not be giving special treatment to Hamilton.” – Glen Murray

http://www.therecord.com/news/local/article/899999--province-won-t-play-favourites-with-transit-funds-minister-says

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By RenaissanceWatcher (registered) | Posted March 13, 2013 at 12:23:29

"Murray backtracks on LRT comments- but he's still a big fan" by Andrew Dreschel on the spec.com today: http://www.thespec.com/opinion/columns/a...

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By Ryan (registered) - website | Posted March 13, 2013 at 13:13:25 in reply to Comment 87220

It sounds like Murray's saying the province is considering giving the City the power to help fund LRT through something like tax-increment financing.

Comment edited by administrator Ryan on 2013-03-13 13:13:37

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By Mal (anonymous) | Posted March 13, 2013 at 13:59:50 in reply to Comment 87223

“I’ve always believed you can do a lot by building the tax base. I’m not big on building the tax burden. I think we have to be quite creative in the fiscal tools we’re looking at and the value in investment tools,” Murray told the Star on Wednesday. “We want look at value planning, tax increment financing, value capture.”

At no point did Murray refer directly to the dozen or more taxes and tolls Metrolinx is believed to be considering.

http://www.thestar.com/news/gta/transportation/2013/02/20/transportation_minister_glen_murray_claims_fresh_ideas_for_transit_investment.html

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By LOL all over again (anonymous) | Posted March 14, 2013 at 04:11:58

Call it what you will, tax or toll we just cannot afford to pay more. There is only one pocket these tariffs come out of and that is the taxpayer's. That pocket is empty. We are already taxed above and beyond, enough is enough it has to stop and stop now. LRT is just too expensive for a city like Hamilton.

Let the downvoting begin.

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By Ryan (registered) - website | Posted March 14, 2013 at 11:39:27 in reply to Comment 87228

You've caught me at a weak moment so I'll bite.

Call it what you will, tax or toll

Right now, taxes pay for our roads, which means everyone subsidizes driving whether they drive or not - to the tune of billions of dollars a year. Anyone who calls themselves a fiscal conservative should be feeling a bit queasy right now.

A toll, on the other hand, charges the people who actually use the service. This does two things:

  1. By putting a fair price on peak congestion, it offsets 20-30 percent of rush hour volumes and allows those people who continue to pay to experience free-flowing traffic and arrive much faster; and

  2. It generates enough revenue to improve regional transit so that it meets the needs of a bigger share of commuters, who then enjoy the benefits of not having to drive.

I realize you're not very good at systematic thinking and refuse to accept the idea that the greater Toronto and Hamilton area obeys the same basic principles of human behaviour as every other place in the world, but at this point I'm writing for the benefit of other readers, not you.

we just cannot afford to pay more

By a variety of measures, Canada has a very low tax burden. Indeed, the main reason the Federal and Ontario governments are having difficulty balancing their budgets is that they're both running structural deficits after years of continuous tax cuts. One predictable result is Ontario's steadily growing cumulative infrastructure deficit, which is itself dragging economic growth in the GTA.

Using 2005 data, Canada is close to the bottom of the list of OECD countries by income tax rates:

Mean Income Tax Rates in 2005 as a Percentage of Income by Country

Note that Canadian taxation - personal, corporate and sales - has gone down further, not up, in the eight years since this comparison.

Looking at tax revenue as a percentage of GDP rather than income, again we find Canada nestled comfortably among industrialized countries in the lower end.

What is true of income and consumption taxes is even more true of business taxes. According to a comprehensive KPMG study that compared 14 countries, Canada had the second-lowest business tax burden - lower than the UK, Netherlands, USA, Germany, Australia, Japan, Italy and France. Only India, a developing country with fragmentary infrastructure and limited governmental reach, scored lower than Canada.

Comment edited by administrator Ryan on 2013-03-14 11:41:27

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By getoutfromthehammerwhileyoucan! (anonymous) | Posted June 24, 2014 at 18:24:46

Why should the suburbs pay for this? We were forced into hamilton. Most of us don't like hamilton at all. You call yourselves the city of waterfalls? 3rd largest city in Ontario? Only because you couldn't take care of yourself. Hamilton sucks. You're not getting an LRT, just a bus line. If you get an LRT, it'l mean Let's Raise Taxes for the rest of our lives to maintain it!

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By Ryan (registered) - website | Posted June 24, 2014 at 21:34:51 in reply to Comment 102843

Amalgamation was forced on everyone, but there's no undoing it now so we should focus on building a strong community rather than playing divisive politics. The city you don't want to contribute toward is the economic engine that made the suburbs possible in the first place. Even before Amalgamation, suburban infrastructure was funded mainly from Hamilton via the Wentworth Regional government.

Investing in LRT will dramatically improve the economy of the city, creating new jobs, increasing tax assessments and alleviating pressure to increase tax rates for all ratepayers, including the suburbs. Even if you never plan to set foot in the old city, the LRT will benefit you and you should support it.

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